Borrower or a Scapegoat?

Though I’m not an economist, neither do I understand the intricacies of economics but certainly believe that somewhere Government machinery is not able to connect the missing links and not playing there cards well.

It’s nothing, except sheer failure of system that the inflation is getting out of control. Though the inflation figures declared by the government doesn’t depict the real time situation; a consumer can give better insight as to what level the cost of living has increased in the recent past.

Like an Embarrassed cat scratching the pillar central bank beating the bush of Repo rate and reverse repo rate. Every time there is a spurt in inflation the only measure central bank finds; is to conveniently increase the benchmark rates thus pushing the borrowers in huffy puffy. I’m sure that except tempering the benchmark rates there might be other ways and means to control the inflation which the governing body should explore.

It has been nine such occasions when the central bank has increased the benchmark rates and on most of such occasions the financial institutions has passed on the hike to there customers. India being a developing country; boast on high number of young professionals, entrepreneurs and consumers, and as the population is young, the consumers is having more number of debts as compared to cash. With each such rise the debt liability of the customer increases whereas the return on deposits remains practically same after deducting the taxes on interest component.

I’ve came across many such cases wherein persons talking home loan at the start of financial year 2008, today have the same debt liability even after paying the EMI for three full years. Thanks to the increasing lending rate, borrowers are becoming scapegoat and paying the cost of economic growth and inefficiencies of government machinery to tackle inflation.

Image source: moodle.formalta.com